While virtual banking and digital payments bring numerous benefits to individuals and small businesses, they can also help with philanthropy.
Whether the beneficiaries are charities, social enterprises or people who have been excluded from traditional financial services, digital payments and virtual banking offer the means to develop new ways of providing support to people who most need it.
Research by Barclays revealed a significant number of charities have recently invested in new digital methods of fundraising. Often, the aim of these initiatives – from upgraded websites and PayPal links to partnerships with third-party platforms, such as JustGiving and Apple Pay – are aimed at making it easier for people to donate to charitable causes.
The same research found that, of charities that have invested in digital technology to make donating easier, just 10 per cent said their investment has not repaid itself within a year of going live.
Cashless payments company Six Payment Services recently launched a monthly payments system enabling charity donors to bypass banks. It claims the system, which enables donors to make monthly or one-off payments on their credit cards without having to give bank details, “revolutionises the charity industry”.
Donors give an initial amount using their credit card via a handheld point-of-sale device, with the option to make a contactless transaction. The donor’s card is then charged with the same amount each month as a recurring payment until they choose to amend or end the subscription.
World Vision Switzerland, which supports vulnerable children around the world, is the first not-for-profit organisation to sign up to use the system and there are plans to enable payment via mobile devices.
Another charitable initiative using digital payments is a pilot scheme in Oxford in which people can give donations to homeless people via online payments.
Homeless people taking part in the scheme wear QR codes around their necks which are linked to an online profile of the person it belongs to. These QR codes enable money to be transferred to the person by scanning the code with a phone and making a digital payment.
Part of the Greater Change scheme backed by Oxford University, the initiative aims to help people off the street and into employment and accommodation with the money they individually raise.
Social enterprises are another area in which digital payments are being used to improve the gathering and distribution of funds. A recent example is the partnership between Kenya-US pay-as-you-go company Angaza and financial services giant Mastercard.
Angaza provides a platform that enables distributors to sell solar home systems, water pumps and clean cookstoves to low-income, off-grid clients. The partnership with MasterCard will enable customers of the social enterprise platform to make digital payments using mobile-based QR technology.
The digital payments option expands on the existing mobile money and cash options that are available to clients who are largely financially excluded, enabling them to acquire solar energy-powered equipment on credit. Mastercard’s first successful pay-as-you-go application programming interface was launched in Uganda last year.
Angaza chief executive Lesley Marincola said the new payment methods will not only enable customers to buy life-changing products securely and efficiently but also open doors to “broader financial inclusion”.
More generally, virtual banking – which is built largely on digital payments – can play a major role in helping people with complex financial backgrounds who may have struggled with budgeting in the past and have found themselves shut out from traditional banking products.
Virtual banking provides them with a way to still make payments online, but without the risk of going into debt – offering them the ability to build up a credit rating and restore their financial standing.
These are just some of the ways in which digital payments technology can be used to help people. As the world embraces a cashless approach for financial transactions in the coming years, you can expect digital payments to become an increasingly potent force for good.